City of Capital: Politics and Markets in the English Financial Revolution

City of Capital: Politics and Markets in the English Financial Revolution

City of Capital: Politics and Markets in the English Financial Revolution

City of Capital: Politics and Markets in the English Financial Revolution


While many have examined how economic interests motivate political action, Bruce Carruthers explores the reverse relationship in political economy by focusing on how political interests shape a market. The author sets his inquiry within the context of late Stuart England, when an active stock market emerged and when Whig and Tory parties vied for control of a newly empowered Parliament. He examines the institutional linkage between politics and the market that consisted of three joint-stock companies - the Bank of England, the East India Company, and the South Sea Company - which all loaned large sums to the government and whose shares dominated trading on the stock market. Through innovative research that connects the voting behavior of individuals in parliamentary elections with their economic behavior in the stock market, Carruthers demonstrates that party conflict figured prominently during the company foundings as Whigs and Tories tried to dominate company directorships. For them, the national debt was,as much a political as a fiscal instrument. In 1712, the Bank was largely controlled by the Whigs, and the South Sea Company by the Tories. The two parties competed, however, for control of the East India Company, and so Whigs tended to trade shares only with Whigs, and Tories with Tories. Probing such connections between politics and markets at both institutional and individual levels, Carruthers ultimately argues that competitive markets are not inherently apolitical spheres guided by economic interest but rather ongoing creations of social actors pursuing multiple goals.


Eumenes, however, perceiving that, while they despised one another, they feared him and were on the watch for an opportunity to kill him, pretended to be in need of money, and got together many talents by borrowing from those who hated him most, in order that they might put confidence in him and refrain from killing him out of regard for the money they had lent him. the consequence was that the wealth of others was his body-guard, and that, whereas men generally preserve their lives by giving, he alone won safety by receiving.


It [the Bank of England] acts, not only as an ordinary bank, but as a great engine of state.

—Adam Smith

Eumenes of cardia was principal secretary to Alexander the Great and a member of his army. As a Greek general in a Macedonian force, Eumenes was regarded with suspicion and contempt. Those who served under him had to respect his martial abilities but this made the Macedonians fear and hate him even more. With the death of Alexander, Eumenes lost his sponsor and his situation suddenly became rather precarious. As Plutarch explained, Eumenes' response consisted of an unusual hostage strategy. He borrowed as much money as he could, especially from his bitterest rivals. As creditors, Eumenes' enemies acquired a financial interest in his ability to repay them, something which he could not do if he were dead. As a debtor, Eumenes made reluctant allies out of his creditors. He had, in effect, taken their money hostage.

The story of Eumenes points out an important fact about debtor-creditor relations. Debtors may depend on creditors for money but after the loan is made, creditors are in a sense beholden to their debtors. Their interests become aligned with the debtor because the creditor now has a stake in the ability of the debtor to repay. Since at least the fourth century B.C., debt has been one way to win friends and influence people.

Without knowing it, many have followed the same strategy. in this book, I am going to concentrate on how one group of debtors has exploited Eume-

Search by... Author
Show... All Results Primary Sources Peer-reviewed


An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.